THE ANDHRA PRADESH SHILPARAMAM ARTS CRAFTS & CULTURAL SOCIETY,VIJAYAWADA vs. DCIT, EXEMPTION CIRCLE-1(1), HYDERABAD

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ITA 263/HYD/2026Status: DisposedITAT Hyderabad07 August 2026AY 2018-1916 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found substance in the assessee's contention regarding non-availability of PAN and login credentials preventing return filing and participation in assessment proceedings. The matter was restored to the Assessing Officer for de novo adjudication, admitting additional evidence.

What were the facts?

The assessee society failed to file its return of income for AY 2018-19. The Assessing Officer initiated reassessment proceedings under Section 147 due to substantial financial transactions and non-filing of return. The assessee claimed non-filing was due to non-availability of PAN and login credentials post-bifurcation.

What were the issues?

Whether the reassessment proceedings initiated due to non-filing of return were valid when the assessee claimed inability to file due to non-availability of PAN and login credentials post-bifurcation.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148A,Section 148,Section 142(1),Section 69A,Section 194A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI MANJUNATHA G, HON’BLE & SHRI RAVISH SOOD, HON’BLE

आयकर अपीलीय अिधकरण, हैदराबाद पीठ�, हैदराबाद INCOME TAX APPELLATE TRIBUNAL, HYDERABAD BENCHES, HYDERABAD BENCH: B BEFORE SHRI MANJUNATHA G, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER ITA 263/HYD/2026 (िनधा�रण वष�/Assessment Year: 2018-19) THE ANDHRA PRADESH DCIT, SHILPARAMAM ARTS CRAFTS & EXEMPTION CIRCLE-1(1) CULTURAL SOCIETY AAYKAR BHAWAN, OPPOSITE 54-16-1/18C, CENTRAL EXCISE LB STADIUM, BASHEER BAGH COLONY, ROAD NO. 2, NEAR HYDERABAD-500004, Vs. LOYOLA COLLEGE, GUNADALA, TELANGANA VIJAYAWADA-520008, ANDHRA PRADESH अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AADTS0226K

अपीलाथ� �ारा/Appellant represented by: Shri Y V Bhanu Narayan Rao, CA ��थ� �ारा/Respondent represented by: Shri K Prasad, Sr-AR सुनवाई की तारीख / Date of conclusion of hearing: 27-July-2026 घोषणा की तारीख / Date of pronouncement: 07-August-2026 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee society is directed against the order passed by the CIT(A), NFAC, Delhi, dated 25.11.2025, which, in turn, arises from the order passed by the Assessing Officer (for short, “AO”) under Section 147 r.w. Section 144 r.w. Section 144B of the Income-tax Act, 1961 (for short, “the Act”), dated 18.03.2023, for the assessment year (“AY”) 2018-19. The assessee society has assailed the impugned order on the following grounds of appeal before us:

1) On the facts and in the circumstances of the case, the order passed by the learned CIT(A), NFAC, Delhi is erroneous and bad in law based on the facts of the case. 2) On the facts and in the circumstances of the case and on legal/technical grounds, the order u/s. 148A(d) of the Act was passed by the Jurisdictional Assessing Officer (JAO) being the Commissioner Of Income Tax, Exemption Circle-1(1), Hyderabad for the A.Y. 2018-19 on 31.03.2022 bearing DIN & Notice No: ITBA/AST/F/148A/2021-22/1042347825(1), and as well as the notice u/s 148 of the Act dated 31.03.2022 having DIN & Notice No: ITBA/AST/S/148_1/2021-22/1042366370(1) issued by the JAO instead of the Faceless A.O. are contrary to the e-assessment of Income Escaping Assessment Scheme, 2022, read with CBDT notification no. 18/2022/F.No. 370142/16/2022-TPL dated 29.03.2022. Thus, all proceedings emanating from such invalid notice, including the reassessment proceedings and the assessment order passed u/s 147 r.w.s 144 r.w.s 144B of the Act are bad in law, null & void and are liable to be quashed. 3) On the facts and in the circumstances of the case, the notice u/s. 148 of the Act dated 31.03.2022 issued by the Jurisdictional Assessing Officer (JAO) for the AY 2018-19 is invalid in law in view of the decision of the honourable jurisdictional High Court of Andhra Pradesh in the case of (i) Boda Vasantha Kumari in W.P. no. 240 of 2026 dated 07.01.2026 and (ii) Smt. Parameela Pasumarthi in W.P. no. 14681 of 2023 in a bunch of Writ petitions dated 28.10.2025 wherein it has been held that as per the amended provisions, w.e.f. 1.4.2021 notices u/s 148 of the Act can be only given by the Officers of the faceless assessment unit, and as such the notice u/s 148 of the Act issued by the JAO, being the Commissioner Of Income Tax, Exemption Circle-1(1), Hyderabad is without jurisdiction. Hence, the income determined/additions made by the learned A.O. by way of an invalid assessment needs to be deleted and the demand raised also needs to be deleted. 4) On the facts and in the circumstances of the case, the learned CIT (A), NFAC, Delhi erred in upholding the act of the learned A.O. who erred in reopening the assessment on presumptions, surmises and mere suspicion and without following Standard operating procedure (SOP) for the AY 2018-19, which act of the learned A.O is against the intention of legislature in introducing the provisions of section 147 of the Act. 5) On the facts and in the circumstances of the case, the learned CIT(A), NFAC, Delhi erred in upholding the additions made by the learned AO for the A.Y.

2018-19 w.r.t. (i) Cash deposits of Rs. 2,93,08,330/- as unexplained money u/s. 69A of the Act, (ii) Income from service of Rs. 22,70,248/- being 8 percent of the turnover from services reported in service tax return of Rs. 2,83,78,094/- and (iii) Income from interest of Rs. 31,43,000/- u/s. 194A of the Act, all totaling to Rs. 3,47,21,578/- and determining the same as income of the Appellant Society for the A.Y. 2018-19. 6) On the facts and in the circumstances of the case, it is submitted that the learned authorities have failed to appreciate the fact that the Andhra Pradesh Shilparamam Arts, Crafts & Cultural Society had continued to operate its erstwhile bank accounts during the relevant period, and its activities were duly carried on. The books of account were properly maintained, financial statements were prepared, and the same were duly audited. For the Assessment Year 2018-19, there was an excess of expenditure over income amounting to Rs. 1,39,92,045/-, clearly evidencing absence of any taxable income. Hence, the additions made would amount to same income/receipts twice. 7) On the facts and in the circumstances of the case, it is further submitted that the assessee Society could not file its return of income for the said assessment year solely due to non-availability of PAN and related login credentials, which were never officially handed over to the Society during the bifurcation proceedings. The non-filing was thus attributable to circumstances beyond the control of the Society and not due to any willful default or neglect. Further, it is submitted that the assessee Society subsequently obtained a new PAN during the year 2018, after the formation of the new Society in the year 2018, strictly in accordance with law and after completing all prescribed formalities. Hence, the non-filing of return for the impugned assessment year deserves to be condoned, and no adverse inference or penal consequences ought to be drawn against the appellant. 8) On the facts and in the circumstances of the case, the assessee Society requests your honorable selves to drop the addition made by the Assessing Officer for Rs. 3,47,21,578/- as all the amounts mentioned are reflected in the Books of accounts and Financial Statements. Further, the demand of Rs. 5,20,86,190/- (inclusive of interest) raised for the A.Y. 2018-19 on the erroneous addition needs to be deleted. 9) On the facts and in the circumstances of the case, the Hon. Income Tax Appellate Tribunal is requested to admit additional grounds/evidence, if any, as per the decision of the honorable Supreme Court in the case of NTPC vs. CIT (229 ITR 383) and consider the same in the interest of justice. 10) The appellant seeks leave to raise any other further/additional grounds OR modify the grounds during the course of the appellate proceedings before your honourable selves, being the Hon. Income Tax Appellate Tribunal.

2. Succinctly stated, the AO, based on information that the assessee society had, during the period relevant to AY 2018-19, carried out substantial financial transactions, viz. (i) turnover from services (as reported in the service tax return): Rs. 2,83,78,094/-; (ii) cash deposits (including through bearer’s cheques) in the current account: Rs. 2,80,85,000/-; (iii) cash withdrawals (including through bearer’s cheques) from the current account: Rs. 56,97,646/-; (iv) cash deposits in one or more accounts (other than a current account and time deposit): Rs. 1,22,330/-; (v) interest income, other than interest on securities: Rs. 31,43,000/-; (vi) payments to contractors: Rs. 22,59,000/-; (vii) rent: Rs. 13,16,000/-; and (viii) fees for professional or technical services: Rs. 1,68,000/-, but had not filed its return of income for the year under consideration, initiated proceedings under Section 148A of the Act.

3.

Thereafter, the AO issued a notice under Section 148A(b) of the Act, calling upon the assessee society to explain as to why a notice under Section 148 of the Act may not be issued in its case. As the assessee society did not respond to the notice issued under Section 148A(b) of the Act, the AO passed an order under Section 148A(d) of the Act, dated 31.03.2022. Consequently, a notice under Section 148 of the Act, dated 31.03.2022, was issued by the AO. However, the assessee society failed to furnish its return of income in response to the aforementioned notice.

4. During the course of the assessment proceedings, the AO issued multiple notices under Section 142(1) of the Act; however, the assessee society failed to respond to the same. Considering that the assessee society had neither filed its return of income in compliance with the notice issued under Section 148 nor come forth with any explanation regarding the cash deposits/income, the AO proceeded to frame the assessment to the best of his judgment under Section 144 of the Act.

5.

Accordingly, the AO, vide his order passed under Section 147 r.w Section 144 r.w Section 144B of the Act, dated 18.03.2023, after making certain additions in the hands of the assessee society, viz. (i) addition on account of unexplained cash deposits in the bank account: Rs. 2,93,08,330/-; (ii) estimation of income @8% of the turnover from services of Rs. 2,83,78,094/- (as reported in the service tax return): Rs. 22,70,248/-; and (iii) interest income on which tax was deducted at source under section 194A of the Act: Rs. 31,43,000/-, determined its income at Rs. 3,47,21,578.

6.

Aggrieved, the assessee society assailed the order passed by the AO before the CIT(A). However, as the assessee society, despite having been afforded sufficient opportunities, failed to participate in the appellate proceedings, the Ld. first appellate authority upheld the additions made by the AO and dismissed the appeal for non-prosecution.

7.

The assessee society, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.

8. We have heard the learned Authorized Representatives of both the parties, perused the orders of the authorities below, and considered the material available on record.

9.

Shri Y. V. Bhanu Narayan Rao, CA, the Ld. Authorized Representative (for short, “AR”) for the assessee society, at the threshold of the hearing, took us through the facts of the case and elaborated upon the background of the assessee society. The learned AR submitted that “Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society” (Parent body), a Government-controlled society, was constituted by the Government of Andhra Pradesh with the primary objective of preservation, promotion, and development of arts, crafts, and cultural heritage, and functioned under the Youth Advancement, Tourism and Culture Department, Government of Andhra Pradesh. Elaborating further, the Ld. AR submitted that, prior to the bifurcation of the erstwhile State of Andhra Pradesh, Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society (Parent body) functioned as a unified institution with its head office at Hyderabad, and during the said period, its surplus operational funds and Government grants were prudently invested in fixed deposits and other bank instruments with nationalized banks, including Andhra Bank (now Union Bank of India). The learned AR submitted that, consequent upon the formation of the State of Telangana, a statutory and administrative bifurcation of the assets and liabilities of Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society (Parent body) was carried out, and pursuant to the Government directions and the bifurcation framework, the units, 6

bank balances, and fixed deposits were apportioned between the successor States of Andhra Pradesh and Telangana based on territorial jurisdiction, operational control, and unit-wise utilization.

10.

Carrying his contention further, the Ld. AR submitted that the fixed deposits relatable to the units falling within the territorial jurisdiction of Andhra Pradesh were transferred to Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society (the assessee society), while the deposits attributable to the Telangana units were retained by Telangana Shilparamam. The Ld. AR submitted that, initially, Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society (Parent body) had, by oversight, obtained two PANs, viz., (i) AAAAS9711R; and (ii) AADTS0226K (2nd/duplicate PAN). It was submitted that PAN: AADTS0226K (the duplicate PAN) was furnished in respect of certain bank accounts located in the Andhra region of the erstwhile combined State. However, the income-tax returns of the unified organization were filed only under the first PAN: AAAAS9711R, and no return of income was ever filed under the duplicate/second PAN: AADTS0226K.

11.

Elaborating further on his contention, the Ld. AR submitted that, after the bifurcation of the erstwhile State of Andhra Pradesh into the States of Telangana and Andhra Pradesh, Shilparamam Arts, Crafts and Cultural Society (Parent body) was also bifurcated into: (i) Shilparamam Arts, Crafts and Cultural Society, Telangana, wherein the existing PANs were continued to be used; and (ii) Andhra

Pradesh Shilparamam Arts, Crafts and Cultural Society for the State of Andhra Pradesh, for which a new PAN, namely, AAHAT0925H, was obtained on 05.07.2018.

12.

The learned AR further submitted that the assets, bank accounts, and fixed deposits of the erstwhile combined Shilparamam Arts, Crafts and Cultural Society (Parent body) were also divided between the resultant societies of Telangana and Andhra Pradesh in accordance with the prescribed bifurcation criteria. Consequently, all the bank accounts maintained with banks situated in the State of Andhra Pradesh were transferred to the newly constituted Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society (assessee society) which continued to be operated under the second PAN: AADTS0226K, which was inadvertently obtained when the organization functioned as a unified entity.

13.

The Ld. AR submitted that the Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society (the assessee society) started filing its returns of income from AY 2019-20 onwards under its newly allotted PAN, i.e., AAHAT0925H, which it had obtained on 05.07.2018. According to the learned AR, the aforesaid fact is duly borne out from the ITBA portal, which evidences that the assessee society filed its return of income under the aforesaid PAN.

14.

The Ld. AR submitted that the assessee society continued its operations after bifurcation by using the erstwhile bank accounts and, for the year under consideration, i.e., AY 2018-19, duly maintained its books of account, prepared

its financial statements, and got the same audited in accordance with law. It was submitted that the assessee society, which had incurred an excess of expenditure over income during the subject year, resulting in no taxable income, however, could not file its return of income for the year under consideration due to the non- availability of the Permanent Account Number (“PAN”) and the related e-filing login credentials, which were never officially handed over to it during the bifurcation proceedings. The Ld. AR submitted that it was only after the constitution of the new society by the Government of Andhra Pradesh in the year 2018 that a fresh PAN was obtained after following the due procedure prescribed under the Act. Elaborating further on his contention, the Ld. AR submitted that all the notices/orders issued in respect of the old PAN, viz., AADTS0226K, were never served upon the assessee society, as neither the address nor the e-filing login credentials pertaining to the said PAN were officially handed over during the bifurcation and thus, the assessee society remained genuinely unaware of the initiation of the reassessment proceedings as well as the consequential assessment framed by the AO.

15.

The Ld. AR submitted that, upon subsequently learning about the assessment order, the assessee society preferred an appeal before the CIT(A) and assailed the assessment order, but inadvertently, it failed to participate in the appellate proceedings and place its case before the first appellate authority, as a consequence whereof its appeal came to be dismissed for want of prosecution.

16. The Ld. AR submitted that the assessee society had duly recorded in its books of account all the financial transactions relating to the bank accounts operated under the erstwhile second/duplicate PAN, i.e., AADTS0226K, for the year relevant to AY 2018-19, but for the reasons stated hereinabove, it could not file its return of income. It was, therefore, submitted that the matter in all fairness and interest of justice be restored to the file of the AO so that he may verify the assessee’s claim that the financial transactions forming the very basis for reopening the assessment, and assessed as its unaccounted income viz., (i) cash deposits in the bank accounts; (ii) day-to-day collections towards gate entry fees from the public/visitors; and (iii) rental receipts from shops/stalls/vendors, were duly recorded in the regular books of account of the assessee society.

17.

Carrying his contention further, the Ld. AR submitted that an application dated 26.07.2026 had been filed before us under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of certain documents as additional evidence: (i) copy of the audit report and audited financial statements for the year under consideration; (ii) copy of the service tax return filed for the relevant period; (iii) summary of the cash book along with the cash ledger reflecting the deposits made into the bank accounts during the year under consideration; (iv) summary of gate entry collections together with the relevant ledger accounts for the year under consideration; (v) details of exhibition stall/shop rent receipts for the year under consideration; and (vi) summary of the bank statements along with copies of the bank statements for the year under 10

consideration. The Ld. AR submitted that, as the aforesaid documents which have a strong bearing on the adjudication of the present case, and are necessary for determining the true income of the assessee society, could not be produced before the authorities below, the same, in the interest of justice be admitted as additional evidence and the matter be restored to the file of the AO with a direction to decide the case afresh after considering the said material and affording a reasonable opportunity of being heard to the assessee society.

18.

Per contra, Shri K Prasad, the learned Senior Departmental Representative (for short, “DR”) objected to the admission of the additional evidence. It was submitted that, since the assessee society had failed to produce the aforesaid documents during the course of the proceedings before the lower authorities, the same ought not to be permitted to be admitted for the first time at the stage of the second appellate proceedings. Apart from that, the learned DR relied upon and supported the orders of the authorities below.

19.

We have heard the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the authorities below and considered the material available on record.

20.

As has been brought to our notice by the learned AR, Shilparamam Arts, Crafts and Cultural Society (Parent body), which was constituted in the erstwhile combined State of Andhra Pradesh on 19.01.2001, had, by inadvertence, obtained two PANs, viz., (i) PAN: AAAAS9711R, which was used for filing the income-

tax returns; and (ii) PAN: AADTS0226K, which was furnished in respect of certain bank accounts maintained in the Andhra region of the then combined State. As observed by us hereinabove, no return of income was ever filed under the duplicate/second PAN, i.e., AADTS0226K. Also, as brought to our notice by the learned AR, consequent upon the bifurcation of the erstwhile combined State of Andhra Pradesh into the States of Telangana and Andhra Pradesh, Shilparamam Arts, Crafts and Cultural Society (Parent body) was also bifurcated into, viz. (i) Shilparamam Arts, Crafts and Cultural Society, Telangana, wherein the existing PANs continued to be used; and (ii) Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society for the State of Andhra Pradesh, for which a new PAN, namely AAHAT0925H, was obtained on 05.07.2018.

21.

As submitted by the learned AR, pursuant to the aforesaid bifurcation of the Parent body, the bank accounts maintained with banks situated in the State of Andhra Pradesh were transferred to the newly constituted Andhra Pradesh Shilparamam Arts, Crafts and Cultural Society (assessee society). However, the said bank accounts continued to be operated under the duplicate/second PAN: AADTS0226K, which had inadvertently been obtained when the organization functioned as a unified entity. As further claimed before us, the assessee society had, for the year under consideration, i.e., AY 2018-19, duly maintained its books of account, prepared its financial statements, and got the same audited in accordance with law. It was stated that, having incurred an excess of expenditure over income, resulting in no taxable income, the assessee could not file its return 12

of income for AY 2018-19 due to the non-availability of the PAN and the related e-filing login credentials which were never officially handed over to it during the bifurcation proceedings.

22.

We further find from the copy of the ITBA profile and the return filing status of the assessee society under PAN: AAHAT0925H (obtained on 05.07.2018) - Page 16 of the assessee’s paper book (APB), that the assessee society had started filing its returns of income only from AY 2019-20 onwards. Apart from that, the claim of the assessee society that no return of income was ever filed under the duplicate/second PAN: AADTS0226K, which had inadvertently been obtained at the time of the constitution of the erstwhile unified Shilparamam Arts, Crafts and Cultural Society (Parent body) on 19.01.2001, can also be gathered from a perusal of the ITBA profile and the income-tax return filing status placed at Page 3-5 of the APB, which reveals that no return of income was ever filed under the said PAN.

23.

In our considered view, there is substance in the Ld. AR’s contention that, due to the non-availability of the Permanent Account Number (“PAN”) and the related e-filing login credentials, it could not file its return of income for the year under consideration, though it claims to have duly maintained its books of account, prepared its financial statements, and got the same audited in accordance with law. We also find merit in the claim of the assessee society that the notices/orders issued in respect of the old PAN were never served upon it, as the

address and the e-filing login credentials relating to the said PAN were never officially handed over to it during the bifurcation proceedings. Accordingly, the assessee society claims to have remained genuinely unaware of the reassessment proceedings and the consequential assessment framed by the AO.

24.

At this stage, however, we may observe that though the assessee society had preferred an appeal before the CIT(A) on 29.04.2023, but we are unable to comprehend as to what prevented it from diligently pursuing the said appeal thereafter. Thus, while there appears to be a plausible explanation for the assessee’s failure to file its return of income for the year under consideration and also participate in the assessment proceedings, but we find it difficult to fathom its failure to prosecute the appeal before the CIT(A).

25.

Be that as it may, considering the totality of the facts and circumstances of the case, we are of the considered view that, in all fairness and in the interest of justice, the matter deserves to be restored to the file of the AO for a de novo adjudication. We find that the assessee society has filed before us an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, along with additional documentary evidence, as referred to by us hereinabove, running into 268 pages. In our considered view, the said evidence will have a material bearing on the adjudication of the issues involved in the present appeal and would assist in framing the fresh assessment. Accordingly, we admit the additional evidence and direct the AO to consider the same in the course of the de novo assessment proceedings. Needless to say, while framing the fresh assessment, the AO shall afford a reasonable opportunity of being heard to the assessee society, which shall remain at liberty to substantiate its claims by producing the additional evidence as had been placed on our record, as well as any other documentary evidence that it may be advised to rely upon.

26.

Before parting, we may clarify that we have merely restored the matter to the file of the AO for fresh adjudication, and have not expressed any view on the merits of the additions made by the AO or on the claims raised by the assessee society, which issues are left open to be examined and decided by the AO independently in accordance with extant law.

27.

In the result, the appeal filed by the assessee society is allowed for statistical purposes in terms of our aforesaid observations.

Order pronounced in the open Court on this 07th day of August, 2026.

Sd/- Sd/- MANJUNATHA G RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad Dated: 07th August, 2026. *OKK/SPS Copy to: THE ANDHRA PRADESH SHILPARAMAM ARTS CRAFTS & CULTURAL SOCIETY, 54- 16-1/18C, CENTRAL EXCISE COLONY, 1 ROAD NO. 2, NEAR LOYOLA COLLEGE, VIJAYAWADA-520008, GUNADALA, ANDHRA PRADESH 2 DCIT, EXEMPTION CIRCLE-1(1), AAYKAR BHAWAN, OPPOSITE LB STADIUM, BASHEER BAGH, HYDERABAD-500004, TELANGANA 3 THE PCIT, GUNTUR. (II) PCIT/CIT (EXEMPTION), HYDERABAD. 4 THE D.R., ITAT, HYDERABAD BENCH 5 GUARD FILE

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